Nasdaq, AWS offer cloud exchange in a box for regional venues

Nasdaq and Amazon Web Services are partnering to offer regional exchanges a cloud-based exchange infrastructure to help other market operators modernize operations with minimal disruption.

The offering is bundled with a portfolio of managed services and tools for exchanges, and localized cloud compute and connectivity services.

The exchange and the cloud provider have worked together for around 15 years to offer certain Nasdaq services via the cloud, culminating in a 2021 announcement that the pair would move the exchange’s operations entirely to the cloud.

The experience gained through this partnership led to what they call a “blueprint” for how other exchanges could modernize legacy, on-site infrastructures using AWS’s cloud.

“Many of these markets are facing competitive pressures or evolving client needs, and they need to be careful of not falling behind the curve,” says Nasdaq president Tal Cohen. 

Cohen says the exchange’s own cloud migration was influenced by the volatility and volume Nasdaq experienced during the Covid-19 pandemic, where supply chains broke down and obtaining hardware became difficult.

Now that the exchange has migrated three of its marketplaces to the cloud—its MRX Options market in December 2022, its Nasdaq Bond Exchange in August 2023, and its GemX options exchange in November 2023—Cohen says Nasdaq is again doubling down on the partnership and sharing the blueprint with clients.

The offering includes Nasdaq’s Eqlipse platform, which provides a combination of existing marketplace technology offerings, including a trading engine, its clearing and settlement platform, data and intelligence platforms, risk systems, and—via its acquisition of Adenza—trade management workflow tools. All of these can run on AWS’s cloud, and AWS can deploy a private local cloud at each market operator’s existing datacenters, minimizing disruption for clients that have already invested in connecting to that facility.

Location, location, location

“Location matters. And location should not limit your ability to access capabilities,” says Scott Mullins, general manager of AWS’s worldwide financial services business. “We’re bringing our capabilities to localities, and that allows local markets to offer a number of things: it makes a market extensible, they can add capabilities, add new asset classes, it makes infrastructure scalable and flexible ... all of which are very valuable things for markets today in such highly volatile markets.”

Cloud adoption among exchanges began with historical and real-time data storage, hosting analytics tools that require large amounts of stored data and compute power, or other workloads that require daily processing. “The last thing they think about is their core matching engines,” Mullins says.

But the new alliance uses Nasdaq’s lessons in its own system migrations with AWS to deliver a packaged solution for marketplaces wanting join the cloud.

“It’s an advanced and modern infrastructure they can deploy and have underpin their markets, and offer these services to their members so that they can build a center of gravity and an ecosystem that serves their economies and their financial markets,” Cohen says. “It provides the resiliency and performance that clients and regulators have come to expect from us ... in a cost-efficient package that minimizes disruption and allows clients to think about what services they can offer their members, and how they can increase liquidity.”

The blueprint includes Nasdaq Eqlipse Intelligence, a new component of Nasdaq’s toolkit that provides cloud-based data management, analytics, and reporting capabilities. The service enables users to build data strategies using new technologies like AI, Cohen says. “With a data strategy, markets can provide more intelligence, build a more intimate relationship with their customers, and can incorporate what they learn from that into their product strategy.”

Mullins says the fact that Eqlipse Intelligence is powered by cloud, and AWS makes it possible to make sense of data held in disparate systems or inherited as a result of M&A.

“You may have a menagerie of systems ... and often these systems don’t talk to each other. You have different data stores from different systems, and you’re doing a lot of ‘munging,’ a lot of ETL [extract, transform, and load] to get data and turn it into something that delivers insights,” Mullins says. “With this, we can take that burden off market operators so they don’t have to connect all these individual pieces of software together and can be more efficient.”

Clients can run Nasdaq Eqlipse Intelligence in their own local AWS cloud, or utilize broader cloud resources, depending on their requirements, risk and compliance policies, or any regional regulatory factors that prohibit data transfer outside of an organization, he says.

Early adopters

Nasdaq and AWS plan to target market operators in regions around the world, starting with more than 135 marketplaces that currently run on Nasdaq’s existing market technology.

“You build a lot of trust over time. We are highly regulated, and we use a lot of the same technology that we sell. That builds credibility,” Cohen says.

One of these is Nasdaq’s own Nordic markets, which intend to follow the blueprint to adopt a managed infrastructure. That will enable it to provide additional services to clients using AWS’s infrastructure, starting with its Nordic derivatives market, and allow clients to scale their GPU usage in Nasdaq’s Vasby, Sweden datacenter.

In addition, South Africa’s Johannesburg Stock Exchange and Mexican exchange Grupo BMV also plan to adopt parts of the combined offering. JSE has enlisted Nasdaq to develop services for co-location, data intelligence and insights, and client interactions.

Officials say the blueprint model can be applied to JSE’s clearing platform, overall modernization efforts, and adopting AI, adding that it will migrate post-trade workflows to AWS’s cloud.

Meanwhile, Grupo BMV will use the blueprint to support post-trade technology sharing between its clearing and central securities depository platforms, while evaluating the long-term potential for cloud infrastructure in Mexico.

“We can provide this in their own datacenters, side by side to where their markets are trading. We can move applications onto a hybrid or public cloud,” Cohen says. “And we can offer managed services on top of that.”

These services include migrating low-value workloads to AWS’s infrastructure, providing connectivity via AWS’s global regions and availability zones, and compute power (CPU and GPU) as-a-service to support high-intensity number-crunching and data analytics, or AI-based services that require significant compute power.

“There’s enormous synergy between Nasdaq’s and AWS’s client bases, so we see an opportunity to serve existing clients and to reach new ones,” Mullins says. “But when you look at some of these core systems, these are typically running on-premise. So, there is an opportunity for us to help these organizations modernize.”

In the future, Nasdaq plans to make the combined offering available to its roughly 3,700 financial technology provider clients around the world.